Room for RBI to cut rates: PM panel

With the inflation falling below four per cent, the Prime Minister's advisory panel today said there is room for the Reserve Bank to signal further interest rate cuts to spur industrial growth, which turned negative for the second time in December this fiscal.

"There is room for rates cut by the RBI," Prime Minister's Economic Advisory Council (PMEAC) Chairman Suresh Tendulkar told PTI.

He, however, declined to specify the percentage of rate cuts that he expected, saying the decision is with the RBI's domain and the apex bank "will take a call on that".

After more than a year, inflation fell below four per cent to touch 3.92 per cent by the end of the first week of February from close of 13 per cent in August 2008, raising hope for the central bank to slash rates.

The industrial production has contracted for the second time in December by 2 per cent.

Before this, the industrial output fell for the first time in 15 years in October 2008 by 0.3 per cent.

RBI Governor D Subbarao had himself said in Tokyo, "There certainly is room for cutting rates."

Even though the RBI has released over Rs 4,00,000 crore into the system by a series of cuts in policy rates and other tools, it refrained from making any changes in these rates in the third quarterly review of its monetary policy.